National Oilwell Varco gets tenders for 86.1% of Grant Prideco's 6 1/8% notes at early exchange deadline

By Jennifer Chiou

New York, April 4 - National Oilwell Varco, Inc. announced the early results in its offer to issue new National Oilwell 6 1/8% senior notes due 2015 in exchange for all outstanding 6 1/8% senior notes due 2015 issued by Grant Prideco, Inc.

As of the early deadline at 5 p.m. ET on April 3, the company received tenders from holders of $150.32 million, or 86.1%, of the Grant Prideco notes.

The offer is being made in connection with National Oilwell's planned acquisition of Grant Prideco and will expire at 9 a.m. ET on April 21. It began on March 20.

National Oilwell also obtained the necessary consents to eliminate many covenants in the Grant Prideco indenture, to eliminate the restrictions on Grant Prideco's ability to consolidate, merge or sell all or substantially all of its assets and to eliminate some events of default under the Grant Prideco indenture.

The new National Oilwell notes will have the same interest rate, interest payment dates, redemption terms and maturity as the Grant Prideco notes.

In exchange for each Grant Prideco note tendered, holders will receive a new National Oilwell note in a principal amount equal to the exchange price of the Grant Prideco note. The exchange price will be par for each note tendered by the consent deadline, and 95% of par for notes tendered after that time.

The company noted that the principal amount of each new National Oilwell note will be rounded down, if necessary, to the nearest whole multiple of $1,000, and National Oilwell will pay cash equal to the remaining portion.

Holders who tendered by the consent deadline will receive a consent fee of $2.50 per $1,000 principal amount of Grant Prideco notes. Holders who tender must deliver consents and vice versa.

The exchange offer is subject to consummation of the merger and to the receipt of consents from holders of a majority of the notes.

As of March 20, there was $174.59 million principal amount of Grant Prideco notes outstanding.

In December, National Oilwell agreed to acquire Grant Prideco for about $58.00 per share, consisting of $23.20 in cash and 0.4498 of a National Oilwell share.

The merger is expected to close following the Grant Prideco stockholder meeting early in the second quarter.

The dealer manager for the exchange offer is Goldman, Sachs & Co. (212 902-9077 or 800 828-3182), and the information agent is Global Bondholder Services Corp. (212 430-3774 for banks and brokers, otherwise 866 470-3700).

Houston-based National Oilwell manufactures and sells equipment and components used in oil and gas drilling and production operations.

Grant Prideco, also based in Houston, specializes in drill bits, drill stem technology and specialty tools for the oil and gas industries.

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